Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

(Do not check if a smaller reporting company)

Smaller reporting company

x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No þ

As of January 14, 2013, the registrant had outstanding 12,807,975 shares of its $.001 par value Common Stock.

See accompanying condensed notes to the interim consolidated financial statements

3

INTELLIGENT LIVING CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

For the 3 month period ended

For the 6 month period ended

November 30,

November 30

2012

2011

2012

2011

REVENUES

Intelligent Home: Equipment & Services

$

9,047

$

102,848

$

34,414

$

165,610

COST OF REVENUES

Intelligent Home: Equipment & Services

1,547

47,676

1,699

80,690

GROSS PROFIT

7,500

55,172

32,715

84,920

EXPENSES

Selling expense

-

(67)

-

3,108

Salaries

1,770

23,859

3,577

44,144

Depreciation

1,297

2,935

2,563

5,997

Office & Administrative

16,910

20,053

28,379

61,156

TOTAL OPERATING EXPENSES

19,977

46,780

34,519

114,405

GAIN (LOSS) FROM OPERATIONS

(12,477)

8,392

(1,804)

(29,485)

OTHER INCOME (EXPENSE)

Beneficial conversion and fee discount expense

(12,750)

-

(12,750)

-

Interest expense

(20,620)

(22,280)

(39,784)

(41,313)

TOTAL OTHER INCOME (EXPENSE)

(33,370)

(22,280)

(52,534)

(41,231)

INCOME (LOSS) FROM CONTINUING OPERATIONS

(45,847)

(13,888)

(54,338)

(70,716)

(LOSS) FROM DISCONTINUED OPERATIONS

-

(632)

-

(1,221)

CONSOLIDATED NET (LOSS) BEFORE INCOME TAX

(45,847)

(14,520)

(54,338)

(71,937)

Income Tax Expense

$

-

-

-

-

NET (LOSS)

(45,847)

$

(14,520)

(54,338)

(71,937)

EARNINGS PER SHARE BASIC AND DILUTED

(Loss) income per share from continuing operations

(0.00)

(0.02)

(0.00)

(0.10)

(Loss) per share from discontinued operations

(0.00)

(0.00)

(0.00)

(0.00)

Net (Loss) per share

(0.00)

(0.02)

(0.00)

(0.10)

Weighted average number of common stock shares outstanding, basic and diluted

12,807,975

706,302

12,796,500

706,302

OTHER COMPREHENSIVE GAIN (LOSS)

Foreign currency translation gain (loss)

218

20,722

(14,703)

21,476

$

COMPREHENSIVE (LOSS)

(45,629)

$

6,202

$

(69,041)

$

(50,461)

See accompanying condensed notes to the interim consolidated financial statements

4

INTELLIGENT LIVING CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the 6 month period ended

November 30,

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(54,338)

$

(71,937)

Adjustments to reconcile net loss

to net cash used in operating activities:

Amortization of debt discount

12,750

-

Depreciation / Amortization

2,563

5,997

Decrease (increase), net of acquisition, in:

Accounts receivable

6,916

(40,013)

Accounts receivable related party

-

16,123

Prepaid expenses

(120)

-

Inventory

-

(7,535)

Increase (decrease), net of acquisition, in:

Accrued liabilities and interest

(119,363)

33,106

Accounts payable

(4,031)

1,491

GST tax refundable

(179)

702

Net cash used in operating activities

(155,802)

(62,066)

CASH FLOWS FROM INVESTING ACTIVITIES:

Net cash used in investing activities

-

-

CASH FLOWS FROM FINANCING ACTIVITIES:

Bank Line of Credit

5,593

(2,661)

Proceeds of loans

42,500

-

Proceeds of loans, related party

236,064

64,454

Repayment of loans, related party

(101,791)

-

Net cash provided by financing activities

182,366

61,793

Net increase (decrease) in cash

26,564

(273)

Effect of foreign exchange on cash

(2,635)

5,812

Cash, beginning of period

2,685

3,475

Cash, end of period

$

26,614

$

9,014

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest and income taxes:

Interest

$

13,099

$

12,428

Income taxes

$

-

$

-

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Common stock issued for debt and interest

$

9,000

$

9,000

Accrued liabilities converted to debenture

$

122,000

180,000

Short term loan converted to debenture

$

30,267

-

See accompanying condensed notes to the interim consolidated financial statements

5

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

NOTE 1  BASIS OF PRESENTATION

Intelligent Living Corp (ILC, the Company, we, us) was incorporated in the State of Nevada in 1998 and maintains offices in Vancouver, British Columbia and Phoenix, Arizona. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and historically has offered automation technology for single and multi unit new construction and existing buildings. Income was derived from both equipment sales and the provision of installation, repair and maintenance services and customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses. MCM was incorporated in 1994, began supplying home automation and energy management solutions in 2003 and was acquired by Intelligent Living in 2006.

The Company previously engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations and evaluate ways and means to recover costs related to the home décor import and distribution business. This process concluded during the year ended May 31, 2012 and any future impact on ongoing operations is expected to be de minimis.

In 2008 the Company shifted its focus to the western Canadian housing market. Compared to the US housing market the western Canadian housing market, and in particular the greater Vancouver housing market, has remained relatively stable with new construction and renovation projects. Beginning in the summer of 2012 the Canadian resale market cooled and prices have contracted slightly in most areas. This trend is forecast to continue through the coming quarters as the market rebalances.

The market opportunities for the Companys control and automation services and products and associated project margins are enhanced when combined with building design and construction. Over several quarters the Company has actively evaluated opportunities to expand its business activities vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within the construction and renovation sectors.

During FY 2012 the Company began planning the shift of its activities to design build services targeting small footprint energy efficient smart housing, specific to the needs of North American Indian communities and emergency relief housing, and multi-strata property renovation and development. Projects will incorporate automation and control as standard features. These areas of business capitalize on the Companys experience designing and supplying environmental control and automation technology and better utilize the Companys strong in-house engineering, design and project management capabilities.

Early in the planning process it became clear that restructuring would be required in order for the Company to attract the working capital financing required to support expansion. On October 31, 2011 the Companys board of directors approved a Consent Resolution amending the Companys Articles of Incorporation to affect a one for one hundred and fifty reverse split of the Companys common stock, and adjustment of the Companys authorized capital to eight hundred million common shares and five million preferred shares. The proposed amendments were approved by a majority of shareholders on November 1, 2011. The Company filed a preliminary Schedule 14C Information Statement outlining proposed amendments to the Companys Articles of Incorporation on November 9, 2011 and a definitive Schedule 14C Information Statement on November 25, 2011. The Company set November 25, 2011 as the record date for notification to shareholders. The Company filed the amended Articles of Incorporation with the Nevada Secretary of State on December 12, 2011, with an effective posting date of December 22, 2011. The reverse split was approved for trading purposes by the Financial Industry Regulatory Authority [FINRA] on January 18, 2012.

6

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

Restructuring was completed during the year ended May 31, 2012 and the Company has begun implementation of its diversification strategy.

Results from ongoing operations reported for the period ending November 30, 2012 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support and reflect development expenses related to the Companys diversification strategy. Results from operations reported for the period ending November 30, 2011 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support.

The Companys year-end is May 31.

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the period ended May 31, 2012. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered material recurring losses from operations since inception. At November 30, 2012, the Company had a working capital deficit of $1,061,811, an accumulated deficit of $15,305,738 and historically has reported negative cash flows from consolidated operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.

Continuation of the Company is dependent on achieving sufficiently profitable operations and obtaining additional financing. Management has and is continuing to raise additional capital from various sources. There can be no assurances that the Company will be continue to be successful in raising additional capital. The financial statements do not include any adjustment relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Intelligent Living Corp. is presented to assist in understanding the Companys financial statements. The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

7

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

Earnings per Share

The Company has adopted ASC 260 Earnings per Share. Basic loss per share is computed using the weighted average number of common shares outstanding. Diluted net loss per share is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The following table represents our assets and liabilities by level measured at fair value on a recurring basis at November 30, 2012

Description

Level 1

Level 2

Level 3

None

None

none

The adoption of this standard did not have a material effect on the Companys financial position, results of operations or cash flows.

In accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, we recognize the advantageous value of conversion rights attached to such types of convertible debt. Such rights give the debt holder the ability to convert their debt into common stock at a price per share that is less than the trading price to the public on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debentures and related accruing interest, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the straight line method.

Recent Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, ''Technical Corrections and Improvements" in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

Standards Update 2010-22 (SEC Update)" in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, "Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment" in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles -Goodwill and Other -General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities. Under ASU 2011-11 disclosures are required to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the ASU requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013.

In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment (the revised standard). Under ASU No. 2011-08 companies have the option to perform a qualitative assessment that may allow them to skip the annual two-step test and reduce costs. The guidance is effective for fiscal years beginning after December 15, 2011 and earlier adoption is permitted.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. The guidance improves the comparability of financial reporting and facilitates the convergence of U.S. GAAP and IFRS be amending the guidance in ASC 220, Comprehensive Income. Under the amended guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. This guidance is effective retrospectively for annual and interim periods beginning after December 15, 2011. The adoption of the guidance is not expected to have a material impact on the Company's Consolidated Financial Statements or the Notes thereto.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations, or cash flows.

9

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

NOTE 3 - COMMON STOCK

During the six months ended November 30, 2012 the Company issued 300,000 shares of its unregistered common stock for conversion of $9,000 of debt principal. The conversion was made in accordance with the terms of the underlying agreement.

NOTE 4  RELATED PARTIES

The Company had short-term loans outstanding to corporate officers at May 31, 2012 in the amount of $350,232. They are unsecured, due on demand and bear interest at an average rate of 9.7%. Accrued interest to May 31, 2012 was $785.

During the quarter ended November 30, 2011, the Company converted $122,000 of accrued liabilities, into a new related party debenture in the same amount and re-classified and converted a $30,267 short term non-interest bearing note into a new related party debenture. The debentures bear interest at 6% and mature on June 1, 2014. The debentures are convertible into shares of common stock at a conversion price equal to the lowest closing price per share of the Companys common stock for the 20 trading days immediately preceding the date of conversion or at a price of $0.0005 per share whichever is greater. The Company determined that there was no derivative liability or beneficial conversion associated with the new debentures.

During the six months ended November 30, 2012 the balance sheet liability associated with related party loans and debentures increased by $146,035. These loans are uncollateralized and due on demand. The Company paid the Companys officers $43,726 of loan principal and $13,099 of interest in cash, and accrued related party interest of $2,857. Total outstanding related party debt [principal plus accrued interest] for the period ended November 30, 2012 and May 31, 2012 was respectively $499,124 and $351,017.

The following table summarizes the amounts due to related parties at November 30, 2012:

Related Parties

Principal

Outstanding on

November 30,

2012

Interest

Accrued to

November 30,

2012

Short term notes

$

357,000

$

1,399

Long term debentures

139,267

1,458

Total

$

496,267

$

2,857

The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech), a company controlled by Murat Erbatur the Companys COO. The Company provides technical consulting services to ScanTech and Scan Techs clients on an as needed basis. For the period ended November 30, 2012 the total value of services provided was $20,006.

NOTE 5  THIRD PARTY NOTES AND DEBENTURES PAYABLE

During the 12 months ended May 31, 2012 the Company reclassified $80,000 of accrued liability into a non interest bearing convertible note maturing on June 1, 2012. The accrued liability resulted from professional fees payable under a consulting contract dated July 2010. Pursuant to terms of the consulting contract, the note formalizes the Companys option to settle the outstanding liability through issuance of common stock and the effective date of the note tacks back to December 2010 reflecting the period in which the Company

10

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

realized the benefit of the services. The note is convertible into shares of the Companys common stock at a conversion price not less than the greater of $0.0005 per share or the lowest closing price of the Companys Common Stock for any trading day on which a Notice of Conversion is received, or for any of the 20 consecutive days on which shares of the Company traded immediately preceding the date of receipt of each Notice of Conversion. The Company determined that there was no derivative liability or beneficial conversion associated with the note.

During the period ended May 31, 2012 the Company converted $18,750 of third party short term note principal into 625,000 shares of common stock at a share price of $0.03 per share. The conversion was made in accordance with the underlying debt agreement. The total short term third party non-interest bearing note principal outstanding on May 31, 2012 was $88,739.

In the 12 months ended May 31, 2012 the Company converted $37,500 of debenture principal and into 1,250,000 shares of the Companys common stock. All conversions were within terms of the underlying agreements. The total $730,753 debenture principal outstanding on May 31, 2012 consists of: $75,000 in short term debentures and $655,753 in long term debentures.

During the 6 months ended November 30, 2012 the Company converted $9,000 of short term note principal into 300,000 shares of the Companys common stock. The conversion was within the terms of the underlying agreement.

During the quarter ended November 30, 2012 the Company negotiated an 8% convertible debenture, principal amount of $42,500, with Asher Enterprises, Inc. The debenture, due in June 2013, is convertible into shares of the Companys common stock, at the discretion of the holder, commencing 180 days following the date of the debenture at a conversion price per share equal to a discount of 42% from the average of the lowest three closing prices for the Companys stock during the ten days prior to conversion or $0.00009 per share whichever is greater. The Company determined that there was a beneficial conversion feature associated with the debenture equal to the principal value of the note. An expense equal to the amount of the beneficial conversion feature is being amortized over the life of the note. During the period ended November 30, 2012 the Company recorded expenses of $850 for accrued interest and $12,750 related to amortization of the debenture discount. Pursuant to the terms of the debenture, the Company has instructed its stock transfer agent to reserve an agreed upon number of shares of the Companys common stock to be issued if the debenture is converted. As of November 30, 2012, 17,500,000 shares have been reserved, but are not considered as issued and outstanding.

All outstanding notes and debentures were evaluated for embedded derivatives in accordance with ASC 815 and were found to not include any embedded derivatives.

Third party short term principal outstanding on November 30, 2012 was $197,950, consisting of note principal $80,450 and debenture principal $117,500. Total third party long term principal outstanding on November 30, 2012 consisted of debenture principal of $655,753. Total outstanding third party principal outstanding on November 30, 2012 was $853,703.

11

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

The following tables summarize the outstanding principal and discounts associated with debentures and notes outstanding at May 31, 2012 and November 30, 2012.

May 31, 2012

Long and Short Term Debentures

Notes

Total

Principal at end

of period

Remaining

Discounts

Balance Sheet

Amount net of

discounts

Principal at end

of period

End of Period

Balance Sheet

Amount

$730,753

nil

730,753

88,739

819,492

November 30, 2012

Long and Short Term Debentures

Notes

Total

Principal at end

of period

Remaining

Discounts

Balance Sheet

Amount net of

discounts

Principal at end

of period

End of Period

Balance Sheet

Amount

$773,253

$29,750

$743,503

$80,450

$823,953

The principal and accrued interest on notes and debentures as at May 31, 2012 and November 30, 2012 are summarized in the following tables:

Notes and Debentures

Principal

Amount at

May 31, 2012

Weighted

Average

Interest Rate

Accrued Interest

to

May 31, 2012

Third Party Notes

$

88,739

NIL

$

NIL

Third Party Debentures

730,753

6.5%

272,672

Total

$

819,492

5.8%

$

272,672

Notes and Debentures

Principal

Amount at

Nov 30, 2012

Weighted

Average

Interest Rate

Accrued Interest

Nov 30, 2012

Third Party Notes

$

80,450

NIL

$

nil

Third Party Debentures

773,253

6.1%

297,294

Total

$

853,703

5.7%

$

297,294

Principal payments on loans and debentures payable in the years ending May 31, 2013 through 2017 are as follows:

Fiscal

Year

Principal

2013

$155,450

2014

$274,980

2015

$423,273

2016

-

2017

-

Total

$853,703

NOTE 6  DISCONTINUED OPERATIONS

In prior periods the Company disposed of all discontinued inventory and fully depreciated all plant and equipment assets. At November 30, 2012, assets from discontinued operations were de minimis.

12

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2012

(Unaudited)

Liabilities from discontinued operations consisted of:

Description

May 31,

2012

November 30,

2012

Note Payable

$

61,250

$

52,250

Total liabilities related to discontinued operations

$

61,250

$

52,250

NOTE 7  SUBSEQUENT EVENTS

There were no subsequent events from the end of the quarter to the date of issuance of this filing

13

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF CONTINUING AND FUTURE PLAN OF OPERATION

Cautionary Statement Regarding Forward-Looking Statements. This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions or words which, by their nature, refer to future events.

In some cases, you can also identify forward-looking statements by terminology such as "may", "will", "should", "plans", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

OVERVIEW

Intelligent Living Corp (ILC, the Company, we, us) was incorporated in the State of Nevada in 1998 and maintains offices in Vancouver, British Columbia and Phoenix, Arizona. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and historically has offered automation technology for single and multi unit new construction and existing buildings. Income was derived from both equipment sales and the provision of installation, repair and maintenance services and customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses. MCM was incorporated in 1994, began supplying home automation and energy management solutions in 2003 and was acquired by Intelligent Living in 2006.

The Company previously engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations and evaluate ways and means to recover costs related to the home décor import and distribution business. This process concluded during the year ended May 31, 2012 and any future impact on ongoing operations is expected to be de minimis.

In 2008 the Company shifted its focus to the western Canadian housing market. Compared to the US housing market the western Canadian housing market, and in particular the greater Vancouver housing market, has remained relatively stable with new construction and renovation projects. Beginning in the summer of 2012 the Canadian resale market cooled and prices have contracted slightly in most areas. This trend is forecast to continue through the coming quarters as the market rebalances.

The market opportunities for the Companys control and automation services and products and associated project margins are enhanced when combined with building design and construction. Over several quarters the Company has actively evaluated opportunities to expand its business activities vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within the construction and renovation sectors.

14

During FY 2012 the Company began planning the shift of its activities to design build services targeting small footprint energy efficient smart housing, specific to the needs of North American Indian communities and emergency relief housing, and multi-strata property renovation and development. Projects will incorporate automation and control as standard features. These areas of business capitalize on the Companys experience designing and supplying environmental control and automation technology and better utilize the Companys strong in-house engineering, design and project management capabilities.

Early in the planning process it became clear that restructuring would be required in order for the Company to attract the working capital financing required to support expansion. On October 31, 2011 the Companys board of directors approved a Consent Resolution amending the Companys Articles of Incorporation to affect a one for one hundred and fifty reverse split of the Companys common stock, and adjustment of the Companys authorized capital to eight hundred million common shares and five million preferred shares. The proposed amendments were approved by a majority of shareholders on November 1, 2011. The Company filed a preliminary Schedule 14C Information Statement outlining proposed amendments to the Companys Articles of Incorporation on November 9, 2011 and a definitive Schedule 14C Information Statement on November 25, 2011. The Company set November 25, 2011 as the record date for notification to shareholders. The Company filed the amended Articles of Incorporation with the Nevada Secretary of State on December 12, 2011, with an effective posting date of December 22, 2011. The reverse split was approved for trading purposes by the Financial Industry Regulatory Authority [FINRA] on January 18, 2012.

Restructuring was completed during the year ended May 31, 2012 and the Company has begun implementation of its diversification strategy.

Results from ongoing operations reported for the period ending November 30, 2012 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support and reflect development expenses related to the Companys diversification strategy. Results from operations reported for the period ending November 30, 2011 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support.

Foreign currency translation

MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entitys functional currency are translated into the entitys functional currency at the exchange rate ruling on the date of the transaction. Currency translation differences are recognized in the statement of income for the period.

On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.

During the six month period June 1, 2012 through November 30, 2012, the US dollar to Canadian Dollar exchange rate has varied from a low of 0.9601 on June 3 and 5, 2012 to a high of 1.0334 on September 15, 2012. The closing exchange rate was 1.0078 and the average exchange rate over the six month period ended November 30, 2012 was 1.0003 resulting in comprehensive income of ($14,703) for the six month period ended November 30, 2012.

Transactions with related parties

Our By-Laws include a provision regarding related party transactions which requires that each participant to such transaction identify all direct and indirect interests to be derived as a result of the Company's entering into the related transaction. A majority of the disinterested members of the board of directors must approve any related party transaction.

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Except for the transactions described below, none of our directors, senior officers or principal shareholders, nor any associate or affiliate of the foregoing have any interest, direct or indirect, in any transaction, since the beginning of the fiscal year ended May 31, 2012, or in any proposed transactions, in which such person had or is to have a direct or indirect material interest.

During the year ended May 31, 2012, the Companys CEO loaned the Company $42,645 and the Companys COO loaned the Company $9,530. These amounts are uncollateralized and due on demand. The Company paid $25,828 in interest to its COO in cash and accrued $7,868 in interest due the Companys CEO.

During the year ended May 31, 2012 $180,000 of accrued liabilities, $115,388 of short term note payable and $2,612 of accrued interest due the Companys CEO was consolidated into a debenture bearing interest at a rate of 6%. The debenture and $5,780 of accrued interest were converted into 9,926,000 shares of common stock of the Company at an average price of $0.03 per share. The conversion was made in accordance with the underlying debt agreement.

During the six month period ended November 30, 2012, the Company converted $122,000 of accrued liabilities due the Companys CEO into a 6% convertible debenture, negotiated short term loans of $25,027 with the Companys CEO and repaid loan and debenture principal of $43,726 in cash. The Company re-classified $30,267 of loan principal due the Companys principal shareholder to a related party loan and converted the principal balance into a 6% convertible debenture. Related party debentures are uncollateralized. During the six months ended November 30, 2012 the balance sheet liability associated with short term principal due the Companys COO increased by $12,354. Related party loans are uncollateralized and due on demand. The Company repaid the Companys COO interest of $13,099 in cash, accrued $1,761 in interest due the Companys CEO and $303 in interest due the Companys principal shareholder. Total outstanding related party debt [principal plus accrued interest] for the period ended November 30, 2012 and May 31, 2012 was respectively $499,124 and $351,017.

The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech), a company controlled by Murat Erbatur the Companys COO. The Company provides technical consulting services to ScanTech and Scan Techs clients on an as needed basis. For the period ended November 30, 2012 the total value of services provided was $20,006.

RESULTS OF OPERATIONS  for the six months and three months ended November 30, 2012 and November 30, 2011

For the six months ended November 30, 2012, revenues from continuing operations were $34,414 compared to $165,610 in the same period ending last year, a decrease of 79%. The decrease in revenue is the net of a 91% decrease in the value of third party residential installations combined with a 100% increase in related party technical consulting work. For the corresponding 2012 and 2011 three month periods ended November 30 revenue was $9,047 and $102,848, a decrease of 91%. The decrease is the net of a 94% decrease in the value of third party residential installations combined with a 100% increase in related party technical consulting work. The decrease in revenue from third party residential installations is directly a result of the Companys decision to phase out of sub-contract work and transition to design build services

For the six months ended November 30, 2011, gross profit was $32,715 compared to 84,920 in the same period in the prior year, a decrease of 61%. Gross margin (gross profit as a percent of revenue) was 95%, compared to 51% for the same period in the prior year. For the corresponding 2012 and 2011 three month periods ended November 30 gross profit was $7,500 and $55,172 respectively, a decrease of 86%. Gross profit is the net of revenue less the cost of goods. In the periods compared, the Companys cost of goods was low compared to prior quarters. This resulted because revenues were substantially due to professional time billed for completion of sub-contract work and technical consulting which does not have any associated cost of materials. This resulted in the large increase in gross margin reflecting the low cost of revenue associated with professional fees.

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Operating expenses for the six months ending November 30, 2011 were $34,519 versus $114,405 for the same period in the prior year and $19,977 versus $46,780 for the three month periods ended November 30, 2011 and 2010. The year to date operating expense decrease of 70% resulted from across the board expense reductions: 100% reduction in selling expenses, 92% reduction in salary costs, 57% in depreciation expenses, and 54% in administration expenses resulting principally from across the board reduced costs of services and supplies including audit, legal and compliance fees and expenses. Operating expenses for the three month period ended November 30, 2012 were similarly reduced across all categories.

The Company recorded an operating loss from continuing operations of ($1,804) for the six month period ended November 30, 2012 compared to an operating loss of ($29,485) for the same period in the prior year, a decrease of 94%. The Company recorded an operating loss from continuing operations of ($12,477) for the three month period ended November 30, 2012 compared to an operating profit of $8,392 for the same period in the prior year.

Total other expenses for the six month period ending November 30, 2012 were $52,534 compared to $41,231 for the comparable period in the prior year, an increase of 27%. The increase resulted from a 100% increase in accretion expense associated with the Companys recent third party financings and a small decrease in interest expense compared to the same period in the prior year. Total other expenses for the three month period ended November 30, 2012 were $33,370 compared to $22,280 for the comparable period in the prior year. The increase was almost entirely due to third party financing accretion expense.

The net loss from continuing operations for the six month period ending November 30, 2012 was ($54,338) compared to a net loss of ($70,716) in the comparable period in the prior year, a decrease of 23%. For the three month period ended November 30, 2012 the Company recorded a net loss from continuing operations of ($45,847) compared to a net loss of ($13,888) for the comparable period in the prior year, an increase of 230%.

During the six month and three month periods ended November 30, 2012 the Company did not incur expenses associated with its discontinued wholesale business. In the comparable periods in the prior year the net loss from discontinued operations was ($1,221) and ($632) respectively. The elimination of expenses is a result of the windup of discontinued operations during the year ended May 31, 2012.

The consolidated net loss for the six months ended November 30, 2012 was ($54,338) compared to a total net loss of ($71,937) for the corresponding period in the prior year. A loss of ($14,703) was realized as a result of foreign currency translation and the resulting comprehensive loss the period ending November 30, 2012 was $(69,041) compared to a gain of $21,476 as a result of foreign currency translation and a comprehensive loss of ($50,461) for the corresponding period in the prior year.

For the three months ended November 30, 2012 the total net loss was ($45,847) compared to ($14,520) for the corresponding period in the prior year. The Company recognized a gain of $218 on foreign currency translation for the three month period ended November 30, 2012 compared to a gain of $20,722 for the same period in the prior year. The Company recorded a comprehensive loss of ($45,269) for the three months ended November 30, 2012 compared to a comprehensive gain of $6,202 for the corresponding period in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As of November 30, 2012, our principal sources of liquidity included cash and cash equivalents, cash flow from our operating subsidiary, and shareholder and related party loans. At November 30, 2012, cash and cash equivalents totaled $26,614 compared to $2,685 at May 31, 2012.

Our business continues in transition and our liquidity must be considered in light of the risks, expenses and difficulties frequently encountered by companies in our stage of re-development. The Company has historically operated in both the US and Canadian markets. The transition to the home automation sector through the acquisition of MCM Integrated Technologies occurred at the same time that the U.S. housing market entered a

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protracted period of substantially reduced home construction and renovation activity, declining home prices, extensive mortgage foreclosures and a contraction in the availability of consumer credit. The ongoing impairment in the U.S. economy and, to a lesser extent, the Canadian economy and financial markets has and will continue to impact the Companys sales and liquidity for the foreseeable future.

Risk factors relevant to these events and management decisions include, but are not limited to: the success of the Companys diversification strategy and initiative, Companys ability to secure ongoing product supply, foreign exchange fluctuations, continued acceptance of the Companys products and services, changes in technology and consumer adoption of technology, intense competition, the strength of the North American housing market and consumer economy in general, and cannot be credibly quantified by the Company at this time.

Internal and External Sources of Capital

For the six month period ending November 30, 2012 the Company realized a loss from operations of ($1,804) and a net loss of ($54,338). As of November 30, 2012 the Company had a working capital deficit of $1,061,811 and limited assets to sell in order to create short or long term liquidity. Therefore, we are dependent on external sources for funding until such time as the Company develops positive net cash flow to maintain liquidity. Until such time as we have positive cash flow on a sustained basis, the dependence on external capital will remain. There are no guarantees that we will be able to raise external capital in sufficient amounts or on terms acceptable to us.

Investing Activities

There were no investing activities during the six month period ending November 30, 2012.

Financing Activities

Since inception, we financed operations through proceeds from the issuance of equity and debt securities and loans from shareholders and others. To date, we raised approximately $13.5 million from the sale of common stock and as at November 30, 2012 we have borrowings of approximately $1.35 million from investors and shareholders. Funds from these sources were used as working capital to fund the development of the Company.

In the six month period ended November 30, 2012 the balance sheet value of the Companys related party loan and debenture principal increased by $145,250, the Companys line of credit increased by $5,539 These loans are interest bearing and due on demand. The Company negotiated a third party convertible 8% interest bearing loan of $42,500.

FUTURE PLAN OF OPERATIONS

Beginning in 2008 the Company shifted its focus to the western Canadian housing market. The western Canadian housing market, and in particular the greater Vancouver housing market, has remained strong through the US housing downturn with new construction and renovation projects, and ongoing momentum in home sales and re-sales. Through 2012 the U.S. housing market continued to remain depressed with some signs of a market bottom having been reached. The Company will remain focused on the Canadian market until such time as the US market gains upward momentum and or until a significant market opportunity becomes available.

The Company is actively pursuing expansion both vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within related sectors including home construction and development. The Company is pursuing expansion opportunities in parallel with a shift in the Company's focus from supplier/sub-contractor to prime contractor/developer. This shift in focus will allow the Company to gain greater financial and market leverage from its knowhow and engineering and project management capabilities. This shift will also increase the Company's flexibility to pursue project and development opportunities. This shift of focus is expected to result in a short term impact on revenue as the Company is not actively pursuing new supplier/sub-contractor business.

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Beginning in the second quarter of FY 2011 the Company began discussions with a local specialty builder and entered into a non-binding letter of intent to explore joint opportunities for property development within the greater Vancouver area, design build housing specific to the needs of First Nations communities and small economical fast erecting relief housing. The Company initially favored a joint venture approach to these markets; however, after detailed analysis of structural and financial cost benefits, the Company is pursuing these opportunities as the prime contractor/developer.

This effort has led to eco and energy friendly designs for single family housing, a multi-suite elders residence and small footprint relief housing. The designs capitalize on modular construction techniques and utilize advanced building systems. The Company is in negotiation with a coastal First Nations band for turnkey design build housing and has executed Memorandum of Understanding and Non-Disclosure agreements with Coast Tsimshian Resources LP a major First Nations owned timber supplier to jointly pursue domestic markets for Native American Indian housing in both Canada and US and offshore markets for small footprint relief housing. The opportunity to supply housing to Native American Indian communities is extensive and the Company plans to focus effort on developing this market over the balance of the current fiscal year.

The Company has also undertaken extensive pro-forma analysis of multi-strata development opportunities within greater Vancouver communities that have zoning approval for building multi-units on single family residential lots. The Company recently completed a major renovation of a penthouse condominium in Vancouver. This project is a blueprint and showcase for the Companys green building, home automation and energy conservation capabilities. The Company is working with a realtor specializing in Vancouvers urban core evaluating renovation opportunities and is actively looking at ways and means of securing development funding. The greater Vancouver housing market has cooled significantly the recent quarter. Resale and new construction listings are up and the number of registered sales has decreased while residential building permit applications have continued

Cash flow from ongoing business activities combined with the availability of loans from related and third parties are estimated to be sufficient to sustain the current level of operations and planned activities through to the end of the 2013 fiscal year.

OFF BALANCE-SHEET ARRANGEMENTS

During year ended May 31, 2012, and the six months ended November 30, 2012 the Company did not engage in any off-balance sheet arrangements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our bank credit facility because borrowings under the facility are variable rate borrowings. At the current time all of the borrowings under our credit agreements accrue interest at the Prime Rate plus an applicable margin. Assuming that the balance on our variable interest loans as of November 30, 2012, was the same throughout the entire quarter, each 1.0% increase in the prime interest rate on our variable rate borrowings would result in an increase in annual interest expense and a decrease in our cash flows and income before taxes of approximately $3,500 per year.

Foreign Currency Exchange Risks

Our home automation subsidiary (MCM) and discontinued home décor subsidiary (Cardinal Points) have operations in Canada, both have assets and liabilities in Canadian dollars and both use the Canadian Dollar as a functional currency. Each financial period, all assets, including goodwill, and liabilities of MCM and Cardinal Points are translated into U.S. Dollars, our reporting currency, using the closing rate method. In addition, we routinely purchase goods in Canadian dollars for resale in US dollars and goods in US dollars for resale in Canadian dollars.

There are principally two types of foreign exchange risk: transaction risks and translation risks. Transaction risks may impact the results of operations and translation risks may impact comprehensive income. These are discussed more fully below.

Transaction risks

Transactions in currencies other than the functional currency are translated at either an average exchange rate used for the reporting period in which the transaction took place (to approximate to the exchange rate at the date of transactions for that period) or in some cases the rate in effect at the date of the transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is settled or translated, are recognized in the consolidated statements of operations as foreign exchange transaction gains and losses.

MCMs and Cardinal Points cash balances consist of Canadian Dollars and U.S. Dollars. This exposes us to foreign currency exchange rate risk in the Statement of Operations. The change in exposure from period to period is related to the change in the balance of the bank accounts based on timing of event receipts and payments. For the six month period ended November 30, 2012, the Company did not purchase goods valued in US dollars for sale in Canadian dollars and was not subject to transaction risk.

Translation risks

The financial statements of MCM and Cardinal Points, with a functional currency of Canadian dollars, are translated into U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated at period-end exchange rates while revenue, expenses and cash flows are translated at reporting period weighted average exchange rates. Adjustments resulting from these translations are accumulated and reported as the principal component of other comprehensive loss in stockholders equity.

Fluctuation in exchange rates resulted in a year-to-date foreign currency translation loss of ($14,703) on November 30, 2012. Future changes in the value of the U.S. dollar to Canadian dollar could have a material impact on our financial position.

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ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Chief Executive, Principal Financial and Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of November 30, 2012. Based on that evaluation the Chief Executive, Principal Financial and Accounting Officer has concluded that, as of the end of the period covered by this report, there was a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the issuers annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to the lack of monitoring or review of work performed by our management and lack of segregation of duties. As of November 30, 2012, in the preparation of audited financial statements, footnotes and financial data, all of our financial reporting was carried out solely by our chief financial and accounting officer and we did not have an audit committee to monitor and review the work performed. The lack of segregation of duties resulted from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. Based on this evaluation the Chief Executive and Principal Financial Officer has concluded that as of the end of the period covered by this report, the Companys disclosure controls and procedures were not effective.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently involved in any litigation, nor do we know of any threatened litigation against us that would have a material effect on our financial condition.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six month period ended November 30, 2012 the Company converted $9,000 of third party debt principal into 300,000 shares of unregistered common stock at an average price of $0.03 per share. The conversion was made in accordance with the underlying debt agreement.

The Company offered and sold the securities in reliance on an exemption from federal registration under Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), and Rule 506 promulgated thereunder, or alternatively, under Regulation S promulgated under the Securities Act .

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.